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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI SANJAY GARG
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 20.03.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] agitating the levy of penalty under section 271(1)(c) of the Income Tax Act.
None has come present on behalf of the assessee despite notice. However, considering the issue involved and the facts of the case, we are of the view that the case can be decided after hearing the Ld. D.R and hence, we proceed to decide the appeal on merits.
The only issue involved in this case is that while filing return of income the assessee in the self computation failed to include the interest income earned on the bank deposits in the name of his minor two children. During the assessment proceedings, the assessee fairly admitted the above mistake and 2 Shri Akeel A. Master pleaded that the same was inadvertently escaped the notice of the assessee. He accordingly agreed to the above additions during the assessment proceedings. The Assessing Officer (hereinafter referred to as the AO) had also observed that the assessee had not made any suo-moto disallowance under section 14A in respect of exempted income being share of profit from firms of BSR group. He accordingly made a disallowance of Rs.3,40,622/- under section 14A. The AO also initiated the penalty proceedings and levied the penalty under section 271(1)(c) of the Act holding that the assessee had furnished inaccurate particulars of income and had concealed the interest income on the deposits in the name of his two minor children. Being aggrieved by the order of the AO, the assessee preferred appeal before the Ld. CIT(A). It was submitted before the Ld. CIT(A) that due to inadvertence, the income of the minor could not be taken into consideration that there was no willful default or intention on the part of the assessee to furnish inaccurate particulars of income or to conceal his income.
The Ld. CIT(A), however, did not agree with the contention of the assessee and observed that the assessee himself was a chartered accountant and working with a reputed firm M/s. BSR & Co. Chartered Accountants and that he was well versed with the provisions of the Act. He, however, deleted the penalty in respect of additions made under section 14A while relying upon the decision of the Hon’ble Supreme Court in the case of “CIT vs. Reliance Petro Products” (2010) 322 ITR 158 (SC) wherein it has been held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. He, however, confirmed the penalty in respect of non inclusion of the interest income of the minor children into the income of the assessee.
We have heard the Ld. D.R. and have also gone through the records. The facts of the case reveal that non inclusion of the interest income on the bank deposits in the name of minor children, in our view, does not seem to be 3 Shri Akeel A. Master intentional on the part of assessee. The assessee stated that inadvertently it escaped the notice of the assessee and the assessee immediately offered the same during the assessment proceedings. In our view, it is not a case for levy of penalty under section 271(1)(c) of the Act. The proposition of law laid down by the Hon’ble Supreme Court in the case of “Price Waterhouse Coopers Pvt. Ltd. vs. CIT” (2012) 348 ITR 306 (SC) is applicable to the case of the assessee wherein it has been held that the penalty is not leviable if the mistake is bonafide and due to inadvertent error.